Clearview National March 2019 - Issue 208 | Page 81
BUSINESSNEWS
with an MTD for VAT interface. With the
exception outlined in the next section, they
can achieve this as follows:
• Give detailed records of all sales and
costs to their accountant or bookkeeper
who keys them into an accounting
system. This might mean little change
for the business other than the cost.
• Either implement a complicated
accounting system or start using a
system designed for installers. One of
several possible suppliers is my company,
Powered Now.
Remember that manually adding up your
sales and costs to produce the nine-box return
does not comply with MTD for VAT.
THE SPREADSHEET AND THE
COPY AND PASTE GET OUT
The temporary loosening of the rules that
I referred to previously is that for 12 months
only, HMRC will allow the sales and costs to
be held in a spreadsheet. The spreadsheet can
calculate the VAT return and the results can
be copied and pasted into some “Bridging
software” that will submit the VAT return
through the HMRC VAT Portal.
There are some good reasons for allowing
this. Businesses consisting of multiple
companies each with a VAT registration
or partial exemption from VAT require
difficult calculations not supported by any
mainstream systems. Therefore, the final
VAT return is done on a spreadsheet.
However, that doesn’t apply to most
installers. The exemption has been seized on
by many accountants as a way to effectively
get out of MTD for VAT. And over 50
software vendors have made their software
able to accept copy and pasted VAT returns.
We think that using this method is a
mistake for most companies. In fact, we have
looked at making our solution for MTD for
VAT able to accept cut and pasted data. The
work is trivial, but we have decided not to go
down that route. I explain why in the next
section.
REASONS FOR NOT USING
SPREADSHEETS AND
COPY AND PASTE
The first and most obvious reason for
not using spreadsheets and copy and paste
is that the solution will only be allowed for
12 months. So, if you use this approach you
will need to learn about it and start using it.
Then 12 months later you will have to learn
a new method. So why not just make a single
change?
The second reason is that it will be more
work. Entering lots of sales invoices into a
spreadsheet plus copying and pasting totals
is more work than using a system where the
invoices can be produced automatically.
Plus, re-entering data and copying and
pasting makes errors more likely. For instance,
when copying and pasting, simply failing to
highlight the first digit of a number you are
copying can lead to a major error in your VAT
return with attendant fines etc.
Then it should be considered that with
MTD for Profit and Loss following not that
long afterwards, it’s worth getting a system
that will be able to handle that as well rather
than have yet another change.
The final reason is that in not implementing a
full system you may well miss out on the benefits
that you can get from that implementation.
IS THIS BAD FOR INSTALLERS?
From the start of April, every business
reporting VAT on a quarterly basis will have
to comply. Ignoring the deadline will lead
to heavy fines. However, it should be noted
that HMRC say they will make allowances
provided companies have made a genuine
attempt to implement MTD.
Undoubtedly the initial impact of MTD for
VAT and the follow up MTD for Profit and
Loss will be more costs and disruption.
Against this, installers should see benefits in
the medium term as it is fundamentally easier
and cheaper to run a business on a computer
than from memory and bits of paper. There
is an initial learning curve to climb, but after
that the benefits should follow.
THE GOOD NEWS
Trade companies implementing systems can
definitely get some large benefits particularly if
they have some employees. The sort of benefits
reported by my own customers include:
• Much faster creation of quotes and invoices
including while at customers’ premises.
These can be to a professional standard.
All calculations, covering totals, VAT on
invoices and more are done automatically.
• Sending documents by text or email all in
one click is quicker and easier. It also gets
a better customer response while being
cheaper than stamps and paper.
• The information is already on a system,
allowing CIS and VAT returns to be done
automatically. MTD for profit and loss
will be able to be done in the future with
no further input.
• If all costs are on the system too, which is
needed for the MTD for VAT return, it
will be possible to see the profit on jobs
with no further work.
• With everything in one place, there’s no
more hunting around for bits of paper
everywhere.
• All previous quotes and invoices can be
easily viewed.
ABOUT THE AUTHOR
Benjamin Dyer is CEO and co-founder of
Powered Now. Powered Now’s mobile apps
aim to make it easier for installers, builders
and other trades to run their businesses.
www.powerednow.com
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